Medtech asks Congress to repeal device tax

SAN JOSE, Calif. – More than 420 companies including Boston Scientific, St. Jude Medical and Stryker signed on to a letter asking the U.S. Congress to repeal a planned 2.3 percent excise tax on medical devices. The tax could cost $20 billion a year and is set to take effect in 2013 as part of broad health care reform package passed last year.

"The tax is already having an adverse impact on R&D investment and job creation, jeopardizing the U.S. global leadership position in medical device innovation," said the letter.

"If this tax is not repealed, it will continue to force affected companies to consider cutting manufacturing operations, research and development, and employment levels to recoup the lost earnings due to the tax," it said. "It will also adversely impact patient access to new and innovative medical technologies," it added.

"The medical device excise tax is a serious burden for companies struggling to maintain America's global leadership in the development of medical technology," said Stephen J. Ubl, president and CEO of the Advanced Medical Technology Association (AdvaMed), a medtech lobbying group that drafted the letter.

The device tax was one part of a sweeping package of health care reforms passed last year. Sponsors of the bill said the fact that it extends health care coverage to an estimated 30 million currently uninsured people will offset the lost revenue from the tax.

AdvaMed took issue with that claim. The letter noted that similar legislation in Massachusetts provided 400,000 more people access to health insurance in that state but "there is no evidence of a device 'windfall'" there, the letter said.

The letter said the U.S. medtech sector employs more than 400,000 U.S. workers, generates approximately $25 billion in payroll at salaries that are 40 percent more than the national average and invests nearly $10 billion in research and development annually.

We talk about wanting to keep manufacturing jobs in the U.S. So what do we do? Single out the one area that does just that for an excise tax. There are many high-margin businesses including many that export jobs overseas and many that exacerbate the health care cost problem such as fast food, junk food, TV, etc. Why not tax them to help pay for the damage they do? Medical device mfg. reinvests a huge chunk of that profit in R&D to save lives and keep America competitive. We have already had layoffs as a result of this poorly thought-out legislation.